Who Screwed Up the 1970s?

The standard narrative of the stagflation of the 1970s is the one that the right has advanced. The left has no countervailing narrative. In that of the right, the economic doldrums of the ’70s can be squarely hung round the neck of liberals: in the simplified version, because of the welfare state, no further explanation required; in the more complicated one, the inability to choose between the guns of Vietnam or the butter of the Great Society, of Keynesian fine tuning and oil shocks resulting from liberal pussyfooting around in foreign policy. The hero of this narrative is Ronald Reagan who unwound twenty years of leftist regulation and redistribution, unleashing the U.S. economy to do what it does best.

As a liberal, this is the narrative against which I must justify my policy preferences, but more basically, I think it just simplifies a much more complex story. As an example, when Reason, a right-of-center libertarian publication, decides to hold a colloquium on the renewed threat of stagflation, which president do they put on the cover as the personification of the memory of the inflation of the 1970s? Gerald R. Ford:

Reason Magazine, October 2009, President Gerald Ford as the poster-boy for inflation

Poor Gerald Ford: an honorable man whose best association is Chevy Chase spoofs from Saturday Night Live of him tumbling down the airstairs.

It should be recalled that Reagan’s first run for the presidency consisted of his failed challenge to incumbent Ford for the 1976 Republican nomination, and that the real bête-noire of the Ford-Kissinger foreign policy was not the Democrats or the left, but the anti-détente, anti-arms control neoconservatives and elements of the right who found their political figurehead after Barry Goldwater in Ronald Reagan. It should also be recalled that the policy maker credited with the defeat of the inflation of the 1970s is then Federal Reserve Chairman Paul Volcker, a Carter appointee, rather dishonorably shown the door for his efforts by President Reagan in favor of Alan Greenspan.

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The Hegemony of Neoliberalism

A roundup of some recent thinking on the hegemony of neoliberalism:

  1. Taking off from what Matthew Yglesias calls “Prestige Cross-Pollination1 and Ezra Klein “The Tyranny of the Economists,”2 Mike Konczal at RortyBomb relates of the,

    … “credibility gap” between sociologists and economists, even when they deploy the same methods, when it comes to the public debate over the issues we face.3

    It helps to have a paradigm, and in recent years economics has rather forcefully acquired one.4

  2. In his review of Steven Teles’s new book, The Rise of the Conservative Legal Movement,5 Henry Farrell makes a brief assessment of the state of the tyranny of the bureaucracy:

    If you win the technocrats (and [the law and economics movement] arguably has won the technocrats), then you very nearly have won the entire game.6

    This strikes me as about true. The shift rightward of the economics and policy intelligentsia since the New Frontier / Great Society heyday of Keynesian fine tuning has played a significant part in the general right-ward drift of the polity. There aren’t exactly dais upon dais of unreconstructed Keynesians offering policy makers intellectual cover on the Sunday morning shows.

  3. Via Charles Mudede7, Steven Shaviro reacts to Peter Ward’s new book, The Medea Hypothesis: Is Life on Earth Ultimately Self-Destructive?8 Using the purported instability of ecological systems — one of the paradigm cases of self-organization — Mr. Shaviro sets himself against emergence, evolution, complexity, network theory, et al. He identifies Friedrich Hayek as one of the key thinkers of self-organization — the market would be one of the other paradigm cases —

    But the most significant and influential thinker of self-organisation in the past century was undoubtedly Friedrich Hayek, the intellectual progenitor of neoliberalism. … inspired by both cybernetics and biology, Hayek claimed that the “free market” was an ideal mechanism for coordinating all the disparate bits of knowledge that existed dispersed throughout society, and negotiating it towards an optimal outcome. Self-organization, operating impersonally and beyond the ken of any particular human agent, could accomplish what no degree of planning or willful human rationality ever could.9

    Friedrich Hayek, cyberneticist.

Combine these three and where are we for policy making and policy debate?

  1. Yglesias, Matthew, “Prestige Cross-PollinationThink Progress, 2 June 2009
  2. Klein, Ezra, “The Tyranny of the Economists,” The Washington Post, 2 June 2009
  3. Konczal, Mike, “Economists, Methods and Government,” RortyBomb, 3 June 2009
  4. The Future of Economics is Here: The Arational and the Irrational,” This is Not a Dinner Party, 28 September 2008
  5. Teles, Steven, The Rise of the Conservative Legal Movement: The Battle for Control of the Law (Princeton, NJ: Princeton University Press, 2008)
  6. Farrell, Henry, “Fabians and Gramscians in Law and Economics,” Crooked Timber, 30 April 2009
  7. Mudede, Charles, “Self-Made,” SLOG, The Stranger, 28 May 2009
  8. The Medea Hypothesis: Is Life on Earth Ultimately Self-Destructive? (Princeton, NJ: Princeton University Press, 2009)
  9. Shaviro, Steven, “Against Self-Organization,” The Pinocchio Theory, 26 May 2009